Apparently my publisher has started issuing Kindle editions of my books. Two are now available in Amazon’s electronic format: Persuasive Games and Unit Operations.

Readers might be interested to find that MIT Press seems to have taken up a different strategy with their electronic book pricing. Specifically, the Kindle editions do not necessarily cost less than the print books. To wit, Unit Operations currently sells for $10.71 as a paperback on Amazon.com, while the Kindle edition costs the usual $9.99. The hardcover edition Persuasive Games sells for $29.60, while that book’s Kindle edition goes for… exactly the same price.

I haven’t spoken to MITP about this (nor did they notify me that the books were now selling in this format!), but I suspect they’ve made a deliberate effort to think of Kindle books as convenience editions rather than discounted ones. They might even assume that readers will be willing to buy both editions. This might also explain why a Kindle edition of Persuasive Games has appeared before a paperback edition of that book. I’m not sure how I feel about it; Certainly the book has sold well in hardback, and a paper or lower-priced digital edition could eat into those sales. Given the financial state of university presses, I think I understand MITP’s decision, even if I also wish that a more affordable edition of this book existed.

That said, I think that digital book buyers have had the wrong idea about the economics of electronic books. They assume that electronic copies are cheaper to produce and distribute, and that such titles therefore ought to cost much less to purchase. I have first-hand experience in the book business, so I know enough to comment based on more than speculation.

The truth is, books are incredibly cheap to print. Warehousing has come down in price too, and distribution costs have stabilized partly thanks to consolidation in the book retail industry. A book might cost a couple dollars to print and store (and really, that’s a generous figure that assumes very small runs). Distribution discounts can run 50-60%, but larger publishers with more popular books can negotiate. So, a book with a list price of $20 might net $6-8. Naturally, the publisher still has to market its books, pay royalties, and cover its operating costs, and direct sales remove the distribution costs, but let’s bracket all that for now.

As the price of the Kindle edition of Persuasive Games makes clear, publishers can set their price for Kindle books. Amazon pays back 35% of list, although other arrangements probably exist for larger publishers. It’s also worth noting that major distributors have begun bundling ebook services into their overall distribution offerings, taking a cut in exchange for simplifying the process across multiple electronic channels.

Amazon.com wants Kindle books to list at $9.99, and now readers want to pay that much for them (or perhaps they want to pay even less). 35% of $10 is $3.5, or about half as much as the publisher might expect from a print edition (that is, assuming that the book can list at $20. Racing the Beam is a good example, a hardcover book listing at $22.95). So, you can see how electronic books actually bleed money from publishers, even as they add to the coffers of closed-platform ebook manufacturer-sellers like Amazon.com.

That’s the publisher’s perspective. From an author’s perspective, publishers have typically been negotiating electronic rights as a percentage of net proceeds from such editions, rather than a percentage of list price. It seems to me that this net figure is very hard to determine, but will inevitably be much less than one would receive for print royalties. The lesson for authors: seriously consider the royalty rates you negotiate with publishers for electronic rights.

Despite my gripes with the Kindle, I’m not against electronic books. That said, I do think they have a long way to go, and I say that from the perspective of a reader, an author, and a publisher. One idea that I haven’t heard anyone discuss is this: what if electronic books sold for a list price commensurate with that of print editions, but included an option for a print edition of the book at a later time? Given the increasing availability of print-on-demand at industrial scales, this might also reduce the financial outlay of publishers small and large, making it possible for them to take more, or different risks.

published October 18, 2009

Comments

  1. Mark Havenner

    The economics of ebooks are largely in the hands of the distributor, not the publisher. Kindle, for instance, is priced by Amazon. No matter what price the publisher requests, it is Amazon that decides how much it should be. The going rate for most Kindle books is $9.99 and Amazon can discount as much as they please to drive more sales.

    That said – the publisher should have obtained your consent before going into a different format, unless of course it is in your original contract. Print rights and digital rights are two different things.

  2. Ian Bogost

    Mark, sorry, this isn’t right. The prices for Kindle books are not always set by Amazon. The going rate was part of Amazon’s initial negotiations. It’s more complex than that. You’re absolutely right that Amazon can discount to their heart’s content, and that’s good for both readers and publishers, since they pay out based on list.

    On the second point, I didn’t mean to imply that my publisher had done anything without my consent. They have the rights to create these editions in our contract; I just didn’t know that they had done so until I happened upon them.

  3. Mark Guzdial

    As a happy Kindle user, Ian, I’d buy into your model of paying more up front for the electronic version, with an option to get a hardcover paper one later. Where that’s actually most useful for me is not with Kindles, but with audiobooks. It’s my sense that I remember things I “read” via audiobooks better than actually visual reading, but (of course) they’re much harder to quote. Several times now, I have purchased hard copies of books that I own in Audible format, because I need to quote sections of them. (Actually, I once purchased that quotable version via Kindle — I needed it quickly to respond to an NSF query, and it was faster to get delivery via Whispernet than finding it in a bookstore.)

  4. A maligned travel writer

    I was under contract to a travel publisher for a print edition which has been postponed endlessly. Now I got word from the publisher that they want to take it to Kindle (and have done so already without warning me). I am PISSED. The deal I had agreed to was for a percentage of net from book sales, not for electronic copies that don’t sell and don’t have any paper, print and bind or warehousing. Now I am supposed to take a tiny fraction of net off a book that I could simply self publish and take 100%? I am absolutely in favor of Kindle but I am outraged by the conduct of this publisher. Authors already get screwed in print because of the tiny royalties, but this situation has me regretting I ever wrote a word. Kindle didn’t even exist when I sold the print rights. And now there is no print book to show for it!

    Does anyone know of legal resources for this kind of situation?